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Banks Urged to Charge Commissions

Bad debts held by Iranian commercial banks have been rising in recent years since the financial institutions have chosen the interest rate as their main source of revenue. A former banking official believes “commissions” are a more reliable and low-risk source of revenue for banks, news website Banker reported on Saturday. “Unfortunately, many people think that banks are behind inflation as they engage in unhealthy competitions to attract capital, a move that contradicts with their main task as a monetary intermediate,” Seyed Reza Ebrahimi, a former board member of both Tose’e Ta’avon Bank and Bank Tejarat said. Currently, Iranian banks generate humble revenues out of commissions and their major income comes from the interest rate or direct investments on economic projects, he noted. However, he said, the revenue patterns in Barclays, Citi Bank, Deutsche Bank, HSBC and many other international banks have changed now; they are making profit from charging commissions.